Gm Venus fam. In reply to a proposal made several weeks ago for Venus to support LIDO’s wstETH token as collateral on Venus, I am proposing adding support for LDO, the governance token of Lido as a collateral asset on Venus as well.
Motivation
LDO is the governance token of Lido DAO and is sitting at a market cap of USD $3.0B at the time of this writing and sits at the #41 spot in market cap value based on Coingecko. (https://www.coingecko.com/en/coins/lido-dao).
With the launch of Venus protocol on Ethereum mainnet, LDO as a collateral asset on Venus would seem like a good opportunity for LDO governance token holders to collateralize their LDO and take on leverage with it.
LDO is currently available as a collateral asset on other money markets such as Aave. Listing LDO as a collateral asset on Venus would mean that Venus is one of the only few available money markets on-chain that has LDO as a collateral asset.
Background
LDO is the governance token of Lido Protocol, family of open-source peer-to-system software tools deployed on Ethereum and Polygon. The protocol is mainly known for enabling users to stake their tokens with validators, allowing them to receive rewards from validation activities on the blockchain while using the token in a liquid manner in various capacities.
The LDO token was minted on 17th December 2020 and represents governance Lido Protocol. To date, the Lido on Ethereum smart contract accounts for approximately 32% of all staked Ether and has $21.9b in Total Value Locked (TVL) on the protocol.
Benefits
Given that LDO is a fairly liquid asset, on both CEXes and even on-chain, getting it up as a collateral on the isolated markets could help holders of the token be more capital efficient. This is beneficial as it increases liquidity access for token holders.
On mainnet, the Uniswap v3 pool with the highest liquidity can facilitate swaps and in turn liquidations of LDO with a +2 -2% depth of approximately $200k. This should be sufficient on-chain liquidity to support any case of liquidations.
Summary
This proposal outlines the value of bringing LDO as a collateral asset on Venus, which mainly are to capture value from LDO holders on Venus and unlock capital efficiency for holders of the LDO token.
We continue to expand markets, now with the Lido DAO tokens that will allow greater options for investors as well as profitability